Correlation Between Playtech Plc and ACCOR SPADR

Can any of the company-specific risk be diversified away by investing in both Playtech Plc and ACCOR SPADR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Playtech Plc and ACCOR SPADR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Playtech plc and ACCOR SPADR NEW, you can compare the effects of market volatilities on Playtech Plc and ACCOR SPADR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Playtech Plc with a short position of ACCOR SPADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and ACCOR SPADR.

Diversification Opportunities for Playtech Plc and ACCOR SPADR

0.51

Correlation Coefficient

Playtech Plc  ACCOR SPADR

Very weak diversification

The 3 months correlation between Playtech and ACCOR is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and ACCOR SPADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCOR SPADR NEW and Playtech Plc is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Playtech plc are associated (or correlated) with ACCOR SPADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACCOR SPADR NEW has no effect on the direction of Playtech Plc i.e., Playtech Plc and ACCOR SPADR go up and down completely randomly.

Pair Corralation between Playtech Plc and ACCOR SPADR

Assuming the 90 days trading horizon Playtech Plc is expected to generate 1.07 times less return on investment than ACCOR SPADR. In addition to that, Playtech Plc is 1.02 times more volatile than ACCOR SPADR NEW. It trades about 0.15 of its total potential returns per unit of risk. ACCOR SPADR NEW is currently generating about 0.17 per unit of volatility. If you would invest  755.00  in ACCOR SPADR NEW on September 2, 2024 and sell it today you would earn a total of  120.00  from holding ACCOR SPADR NEW or generate 15.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Playtech plc  vs.  ACCOR SPADR NEW

Playtech plc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtech plc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Playtech Plc unveiled solid returns over the last few months and may actually be approaching a breakup point.

ACCOR SPADR NEW

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACCOR SPADR NEW are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ACCOR SPADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Playtech Plc and ACCOR SPADR

The main advantage of trading using opposite Playtech Plc and ACCOR SPADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, ACCOR SPADR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ACCOR SPADR will offset losses from the drop in ACCOR SPADR's long position.

The idea behind Playtech plc and ACCOR SPADR NEW pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.